So, it’s vital to know about and navigate the typical pitfalls which arise whenever you expand and scale up your retail business.
In this report we cover the top five drivers of profitability for growing retailers.
This is based on our expertise helping to scale a number of Australia’s and New Zealand’s top multi-store retail success stories.
These are the aspects that we’ve learnt help to make or break a retailer as they expand their operations.
Recall — almost anyone can produce a multi-store retail performance, but it requires the perfect strategies and systems to construct a profitable one.
Integration Between Physical and Online Shops
Most bricks and mortar retailers have already added an eCommerce station to their company. But most still run their webstores almost like another business operation. Products, inventory, customers and sales statistics don’t get always synchronised between their physical stores and eCommerce site developing a range of omni-channel challenges which harm their business and cause clients to abandon the purchase. By having an integrated setup, retailers can leverage all their inventory across all their stores to increase sales potential and inventory availability for customers. They could provide highly demanded services such as Click & Collect and In-Store Stock Check. They can supply the omni-channel shopping experience that today’s shoppers currently demand and maintain intensifying competition.
By incorporating their eCommerce and physical shops, retailers typically stand to increase sales revenue by 6 percent — that equates to $50,000 increased yearly profit per store.
Many retailers spend a huge amount of the energy on new client acquisition. Small focus is then placed into forcing repeat sales and maximising the lifetime value of the new clients. By capturing key profile information about clients during their first shop visit (often using incentives of benefits of signing up to a loyalty rewards system), you’ve paved the way to communicate together using personalised advertising and targeted promotions to cross-sell complementary things, reorders and push repeat shop visits. For specific marketing ideas to fuel customer development check out this site.
A small improvement in the proportion of your customer base that makes repeat purchases can have a significant effect. Typically, we identify a 4 percent increase in repeat sales when retailers introduce a few of our recommended procedures in this field — that equates to $34,000 additional yearly profit per store.
Planning inventory should be in response to market demand and being able to locate the sweet spot should not be a guessing game. The trick to success is getting the perfect quantity of inventory, in the appropriate places, at the proper times so as to satisfy your clients needs and increase profit.
Some of the most common retail stock mistakes made when expanding to multi-store formats are:
- Over-ordering, resulting in selling things at reduced margins
- Under-ordering, leaving clients with empty hands
This means retailers are frequently marking down stock (and lowering margins), since they’ve over-ordered, or clients are walking from stores empty-handed since the merchant under stocked and did not have what they were searching for.
This can happen if your shop managers are placing buy orders themselves, if providers are ordering for your benefit, or whether you’re putting minimum inventory levels based on’gut instinct’ without always reviewing recent (real time ) sales performance information.
By utilizing data-driven decision making procedures, many retailers see a 3% increase in return on stock — that equates to $15,000 increased yearly profit per store.
Slimming Purchasing Administration
According to the Harvard Business Review, employers lose over 20 percent of the productive capacity to organizational haul –“the structures and procedures that consume precious time and stop individuals from getting things done.”
In retail, buying is among the biggest culprits.
Carefully identifying which products and quantities to buy from each provider and then raising all the purchase orders steals time which could be spent on higher value-adding regions (and generally results in understocking or overstocking mistakes as stated above).
By automating purchasing procedures, most retailers we work with see a 50 percent decline in the number of hours spent on admin — that equates to some $7,500 increase in annual profit per store.
See how much you can enhance your bottom line with our free calculator.
Retail Analytics To Optimise Marketing Investment
Just because one kind of marketing worked for a single shop, does not mean it will work for them all. What is important to find is which sort of marketing channels are in fact contributing to more dollars in the register. By introducing a”how did you hear about us” within an in-store survey procedure (and aligning a loyalty rewards system for this) throughout your network, you may begin to collect vital data which you are able to analyse over time. By combining this centralised sales and customer information, it is possible to identify which stations induce the most profitable, loyal clients you wish to bring in more of. You can take a look at your overall business in addition to individual shops to account for geographic variation.
By retailers using the information, they see 12% increase in return on advertising spend which equates to $15,000 increased yearly profit per store.